A gauge of confidence among homebuilders rose in December to its highest level since April 2006, with respondents encouraged by declining inventory and good sales conditions.
The National Association of Home Builders/Wells Fargo Housing Market Index rose two points to a seasonally adjusted level of 47 from a downwardly revised 45 in November.
Despite eight months of gains, the confidence gauge remains below the key reading of 50. Readings over 50 indicate that more builders see sales conditions as good than poor.
“Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market,” said NAHB chairman Barry Rutenberg, a homebuilder in Gainesville, Fla. “However, one thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today’s overly stringent lending standards.”
“While there is still much room for improvement, the consistent upward trend in builder confidence over the past year is indicative of the gradual recovery that has been taking place in housing markets nationwide and that we expect to continue in 2013,” said NAHB chief economist David Crowe.